Being a sole proprietor is sometimes a default form of business ownership when you have no pressing desire to opt for a more formal establishment such as an LLC, partnership or corporation. However, a sole proprietorship does offer some strong positives and distinct negatives as a way of doing business.

Be Your Own Business

Being a sole proprietor is the way to go if you want no one but yourself to answer to -- at least in an official capacity. You have no business partners to involve in decisions and no investors to appease with profits. You get to decide what hours your business will operate, what products to buy and sell, what services to offer and who to involve in your business.

Simplicity

If you want to go into business for yourself but have no desire for the legal formalities a sole proprietorship may be a good fit. Unless you have professional licenses or local business registrations, there is no formal paperwork you need to file. You can start a proprietorship with little or no start-up funds. You don't even need a separate bank account. You can use money from your personal account. Filing your taxes is also simple, since you can complete the Schedule C to report self-employment income on your individual taxes.

No Liability Protection

When you operate a sole proprietorship, your business is treated as an extension of you. This means that if someone is injured or harmed in your office or while you conduct business, you could face personal responsibility. A lawsuit against your business extends to you. If your business assets don't cover damages, your personal assets may be seized. You can buy an umbrella insurance policy to cover your professional work.

Tax Burden

While reporting your taxes is easy with a sole proprietorship, your tax burden is normally higher than with some other business setups. You not only have to pay regular income tax on your earnings, but you also typically pay self-employment taxes to cover your Social Security costs. This can make your taxes 10 to 15 percent more of your income than it would be if you only paid your regular income tax.

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About the Author

Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.